Principles in internal audit of fund management companies in Vietnam

Principles in internal audit of fund management companies in Vietnam (Internet image)

Regarding this issue, LawNet would like to answer as follows:

1. What is fund management company?

According to Clause 3, Article 2 of Circular 99/2020/TT-BTC, fund management company means an enterprise that has been issued with the securities trading license by the SSC, and takes charge of managing securities investment fund and securities portfolio, and providing securities investment consulting services.

2. Principles in internal audit of fund management companies in Vietnam

Specifically, in Clause 3, Article 5 of Circular 99/2020/TT-BTC, the internal audit in Vietnam must comply with the following rules:

- Independence: The internal audit unit and its operations must be independent from other departments and operations of the fund management company, and shall not bear the management of its Executive Board.

Employees of the internal audit unit are not allowed to concurrently hold any other working positions in the fund management company;

- Objectivity: internal auditors must be objective, unbiased and unprejudiced, and not be influenced and tampered when performing their tasks;

- Truthfulness: The internal audit must be performed in an honest, discreet and responsible manner;

- Cooperation: The internal audit unit is entitled to access all information and documents of the company. Members of the Executive Board and all employees of the fund management company shall cooperate and provide adequate, timely, truthful and accurate information and documents at the request of the internal audit unit.

Departments in the company shall notify the internal audit unit when detecting any weaknesses, shortcomings, violations, risks or loss of assets of the company or its clients;

- Confidentiality: The internal audit unit and its employees shall keep confidentiality of any information obtained during the audit, unless the information must be provided at the request of competent authorities.

3. Responsibilities of the internal audit in Vietnam

The internal audit unit shall:

- Inspect and evaluate the organizational structure, company administration, management and cooperation of each department and holder of each working position in order to prevent conflicts of interest and protect benefits of clients;

- Inspect and evaluate the adequacy, effectiveness, efficiency and compliance with regulations of law and the company’s charter; internal control system;

Internal policies and procedures, including rules of professional ethics, business process, risk management system and procedures, information technology system, accounting, reporting system and procedures, information disclosure, procedures for receiving and settling denunciations and complaints from clients and other internal regulations;

- Inspect the validity, legitimacy, truthfulness, prudency and compliance with business process and risk management procedures;

- Perform operational audit according to the annual internal audit plan. The annual internal audit plan must be approved by the Board of Directors or Board of Members or company’s owner before it is implemented. The annual internal audit plan must comply with the following rules:

+ The internal audit must be carried out annually and on ad hoc basis;

+ The level of risks to operation, procedures and departments must be assessed according to the company’s internal regulations. The audit of operation, procedures and departments with high risks shall be given priority and performed every year;

+ The annual audit plan must be adjusted upon the occurrence of change in the level of risks to operation, procedures and departments;

- Perform audit of operations of all departments in the company every two years;

- Propose solutions for enhancing operational efficiency and effectiveness of the company; monitor the implementation of recommendations after the audit which have been approved by the Board of Directors or the Board of Members or company’s owner.

(Clause 2, Article 5 of Circular 99/2020/TT-BTC)

Tran Thanh Rin

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